US District Court Grants Premium Cigars Relief on Warnings

Earlier last week, a US District Court ruled that the Food and Drug Administration’s subjecting of premium cigars to warnings requirements was arbitrary and capricious in violation of the Administrative Procedure Act (“APA”), insofar as the agency failed to provide a reasoned explanation for this action. The court thus declared unlawful (and vacated) the portion of the FDA’s so-called “Deeming Rule” mandating that premium cigars display designated public health warnings on packaging and advertisements.

The case was brought in January 2018 by a premium cigar retailer, a premium cigar manufacturer, and the Cigar Association of America (a non-profit association that represents premium cigar retailers and manufacturers). The plaintiffs challenged the Deeming Rule’s warning label regime for premium cigars on three primary bases: (1) the warning label regime infringes on Plaintiffs’ First Amendment rights; (2) the FDA imposed the new warning label regime in violation of the APA; and (3) the promulgation of the Deeming Rule violated the US Constitution’s Appointments Clause. The court’s ruling did not reach the first and third bases for challenge.

The court found that the FDA failed to explain why health warnings for premium cigars were appropriate. In his ruling, Judge Amit P. Mehta stated: “Rather than analyzing the behavior of premium cigar consumers, consumer understanding of the risks associated with premium cigar products, or potential gaps in consumer knowledge that warnings might address, the FDA directed readers to the Proposed Deeming Rule. But the Proposed Deeming Rule itself makes clear that the agency was actively contemplating whether health warnings should be required for premium cigars at all…. The FDA’s citation back to the Proposed Deeming Rule therefore leads right back to the original question whether warning labels are necessary for premium cigars. This obviously will not do for reasoned decision-making.” The court also noted that, to the extent the agency relied on evidence to justify the warning regime, the evidence did not apply to premium cigars and their users. The FDA’s citation to studies that comprised a mix of tobacco consumers, a mix of large, cigarillo and small cigar smokers or a mix of smokers and non-smokers, were all insufficient to justify the warning requirements. The court went so far as to criticize the agency for not separately considering whether smokers or prospective smokers of premium cigars “in fact harbor misconceptions about the product or otherwise remain in the dark about the health risks attendant to premium cigar use.”

Apart from putting on hold the FDA’s warnings for premium cigars, the decision is important for other reasons. First, it supports the arguments of the premium cigar industry that premium cigars are different from other cigars and require special consideration by the agency. The issue will be meaningful in the context of other regulatory initiatives by the agency, most notably premarket review requirements and HPHCs (harmful or potentially harmful constituents) for cigars, which the premium cigar industry has criticized for a one-size fits all approach.

Second, the decision highlights the importance of how the FDA frames its rationale for regulation. Interestingly, the court cited to the agency’s own framing of the original question that is central to the dispute. In the Proposed Deeming Rule, the agency put forward two alternatives. Under “Option 1,” the FDA would make all categories of cigar products subject to FDA regulation; under “Option 2,” the FDA would regulate “only a subset of cigars,” excluding premium cigars from the scope of the Rule. At the time it issued the Proposed Deeming Rule, the FDA made clear that its selection of Option 2 would have meant that premium cigars would be excluded from the warnings label requirement. We are left to wonder whether the agency would have been in a stronger position in court had it not itself acknowledged the unique manufacture, marketing and adult consumer orientation of premium cigars.

Third, the court’s decision did not define what a “premium” cigar is, leaving a question as to the types of cigars that are exempt from warning requirements.

For now, the FDA’s warning regime is on hold for premium cigars. While the FDA has stated premium cigars are its lowest priority, we expect the agency will appeal Judge Mehta’s ruling.

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